FHA Home Loans have been a big part of the home buying process when it comes to your financing options. This might not mean much to many, but when you apply for a conventional loan, if you don't get an automated approval, you are declined. With FHA loans, even if you received a refer in the system, your loan can still be manually underwritten. But there are many guidelines that need to be followed, even for a make sense deal. Especially if your qualifying ratios are above the normal FHA requirements of 31/43. This means that your total mortgage payment (to include property taxes, homeowners insurance, association dues) divided by your gross monthly income can't not exceed 31. This called your front end ratio.  Your back end ratio would be your total monthly payment plus any monthly reoccurring debt that would be on your credit report (to include child support and such on your pay stubs) divided by your gross monthly income. This can't exceed 43%. Now, those are the normal qualifying ratios, but they can usually be exceeded by 5% to 6% with a manual underwrite, but depending if you have strong compensating factors. (each lender is different)

 

 

 

So... what are some of the major compensating factors for FHA loans?  Please read below ...

 

The Borrower : (there could be a few more not listed)

• makes a 10% or more down payment on the home.

• shows the ability to save monies consistently and has a conservative use towards their credit.

• shows that there is a minimal increase in their new housing payment from their old payment.  Typically a 10% or less increase.
  

• shows a successful ability in making their housing payments (mortgage or rent) for the last 12 to 24 months. The best proof is when supplying canceled checks. And this FHA compensating factor is much stronger if the previous monthly payments would be the same or greater than the new proposed mortgage payments.
  

• shows cash reserves. Typically 3 months or more. The higher the ratios, but the more monthly reserves, the better this helps out the borrowers chances. This is just to include liquid-able reserves such as cash from checking or savings accounts, stock options, and 401-k plans, etc.  When using such assets as the 401-k plan or retirement funds, only 60% of the total can be used as the reserves. ** you can borrower against such funds for your closing costs and down payment, but these monies won't be counted towards your reserves. This is the same for any gift funds received, that they can't be counted as reserves either.

• can show additional income that is documented but not reflected in their effective income. Such income could be shown as a cash side job that they pay taxes on, maybe income from a spouse who will not be on the mortgage, food stamps, or other public benefits. This is a fine line and up to each lender.
  

• shows that they do not abuse their credit, not over-extending themselves, and or that they don't borrower from one card to the next.
  

• can show that they have a potential for increased income because of their education, profession, or potential raise that would be indicated by their employer.

• is relocating with their spouse and the spouse does not work as of yet, but had a history of stable income prior to moving, and has some sort of job/income lined up that can be documented. This can be at the underwriter's discretion.

 

 

Minimal FHA compensating factors that could play a role in an underwriter's decision :

• Length of time on the job, showing stability.

• Sometimes in cases of refinancing, the length of time at their residence.

 

 

 

Summary : The mortgage industry is ever changing and yes, some things have gotten tougher. Just because you meet the credit score requirements doesn't mean that you are an automatic approval. And if you need some extra help in qualifying for FHA Loans, you can always get a co-signer, which would be a non-occupying co-borrower. Please read below :

 

FHA Loans & FHA co-signers aka non-occupant co-borrowers

 

My credit is not good - but my co-signers credit is excellent - Yippie, I can buy & use FHA loans

 

 

 

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_____________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Dang! It just happened again! My buyer's daughter transferred $20K into their account, because they're really buying the condo for the daughter with her money. (The daughter has bad credit, but a wad of money, so Mom and Dad are making the purchase for her). 

Now we need to show proof of where the money came from - which means copies of the original check, copies of the cashed check, copies of her birth certificate, marriage license, and dog's vaccination.  OK... I jest about the last 3, but DON'T MAKE DEPOSITS WITHOUT SPEAKING TO YOUR LENDER ABOUT THE CONSEQUENCES TO YOUR LOAN. Federal guidelines mandate we need a paper trail for every cent of money that goes through your bank account.

Getting these verifications take time... time that can throw a serious wrench into your loan process. So while it may not be a problem getting down payment assistance from elsewhere, the timing of it causes the real problem.

So what do you do, if someone else is giving you money for your down payment?

1. Be sure your lender approves the amount.

2. Provide a gift letter, promising to put up the money as a gift.

3. Get a cashiers check written directly to the title company.

4. Wait until you have loan approval, and have signed your loan documents.

5. THEN deposit your cashier's check directly into the title company. (check with your local customs, as not all states handle title and escrow the way we do here in Fair Oaks). having the gift money going directly into the title company means only one paper trail... from the gifter to the title coompany.  But if it first goes to the person buying the house, there is an extra layer of paper trail involved, which takes more time.

You do this, and you will avoid a bundle of paperwork that can drive you crazy.  Just make sure you have run this by your lender... then do as they say!

OR... go buy a lottery ticket tonight, then pay cash!

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For homes in the Fair Oaks or Sacramento Area of California.... I'm your gal. I'm occasionally knowledgable, periodically humorous, and always willing to tell you everything I know.  What more could you ask for?

For more blog posts.... click here

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Sally Dunbar, 30 year Broker Associate, Lyon Real Estate, Fair Oaks, (916) 535-0356, SDunbar@GoLyon.com

BANK PRESERVATION CREW STOLE MY STAGING MATERIAL

 

 

 

CASH FOR KEYS

I completed a Cash for Keys on an REO where the owners were still in occupancy. It was an immaculate upscale home in Gilbert AZ near Val Vista Lakes where I live. The owners were appreciative of getting $2,000 for keys and leaving the house clean. They left it in immaculate condition.

My wife and I had some staging material for bathrooms and kitchen, and since this was a nice home, I felt it would help to sell fast with some staging. The material cost around $500.

A week later I went to check the house and found all the staging material missing, but the home had not been broken into. They did not take my flyer stand and flyers.

POLICE REPORT

The Police came to make a report and he agreed that the house was not broken into; that someone entered with a key.

I didn't suspect the former owners, nor her mother who lived across the street, so at first it was a mystery. Finally I noticed the lawn had been mowed. That was my clue.

THE CULPRITS

What happened is the bank had sent their preservation crew to do their trash out , clean the house and  gardening .

There was no work needed inside the house -- it was partially staged -- and they did a sloppy job on the yard.

I had my MLS lockbox, plus a lender required vendor lockbox with the lender specified code. That's how the preservation people got the key. 

They went in legitimately. However, it was obvious  the house needed no cleaning. It was on the maket with my sign outside, and my flyers were in the flyer stand with my phone number. It was also obvious that the staging items in the house were not trash, they were decorations, all brand new.

Yet they took everything, except my flyer's stand.

I don't belive for a minute that the staging material went to the trash . It went to their homes. Also, they would have sent the bank an invoice for cleaning the house.

They didn't clean the house . They cleaned it out .

ASSET MANAGER

I reported this to my asset manager and requested the name of the preservation company. He said he would check but I was never able to get the name.

Nor was I able to be at the property at the same time they were. I didn't want to alienate the AM by pressing him so I gave up.

I chalked the loss up to an important lesson. Next time I  won't use the lenders specified code. 

I'll use my own code. Then when the lender sends someone out, they can't get in without contacting me. This way I know who is going in.

Contact Captain Bill for information on homes for sale in Val Vista Lakes Gilbert AZ

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Mortgage interest rates continue to still be very low, ranging from 4.25% to 4.75% for a 30 year fixed rate. 

So why are interest rates so low?  Some investors on Wall Street fear a double dip recession approaching. And these investors will seek more stability in buying bonds, such as the MBS's, Mortgage Backed Securities. By buying more MBS's, this can control the interest rates. Another reason is because earlier this week Treasury auction bids rose to 18% to record as investors surpass bond dealers.

 

 

 

 

Interest rates at one point this week hit a historical low, but since have increased slightly. But don't fret it, when I say that they have increased, I am talking about the cost of a 30 year fixed interest rate. The rates themselves are the same, but at times during the week, the actual cost might vary from .125 of a point to .375 points. On a $200,000 mortgage, this could mean the difference of $250 to $750. Let's say that this happens on an interest rate of 4.50% for the worse. You can have the choice in paying the extra cost that was mentioned or going to a rate of 4.625% which will usually offset those costs.  What does this do to your mortgage payment?  On a $200,000 loan, your payment would increase $14.92. That means that it could take you anywhere from 17 to 50 months to recoup that difference. This is where a good loan officer will ask you about your goals, to determine what might be the best course of action.

 

 

 

Mortgage Interest Rate Future Outlook

 

There is a hint of inflation that may be coming back and could hurt the markets for the worse.  It could be a bumpy ride ahead. Overall, I would float cautiously in the next 3 to 5 days, but for the long term, I would think rates still hold steady. Meaning that they will continue to be low in the next 30 days, but could be a tad higher than what we are experiencing now. So if I had a settlement date in the next 30 days, I might lock now.

 

 

Word to the WISE :

If you see individuals and or mortgage companies offering mortgage interest rates at 4% or lower, there could be many points and or high lender fees involved.  What is being sold off on Wall Street right now are the 4.0% coupons.  Just be careful in what someone might tell you or promise you just to get you in the door.

 

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- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

Follow me on:

 

 

_____________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

 

 

From the consumer - I have bad credit .. my credit is so so ... my credit is good . My credit scores are good , etc, etc. I have heard it all and just this alone doesn't make or break you as a potential buyer when wanting to buy a home.

The thought process of an average loan officer - Yippie, my borrower has a 635 credit score and my company's cutoff is 620.  This borrower fits the credit ratios also, so I can do the loan.

Knowledge is power people. I know some loan officers in the past that made the mistake of primarily looking at the credit score, aka the fico score,and if it fit the criteria, that they thought they had a good loan. Many would miss some lates on the credit report.  And yes, some even missed judgments and or collection accounts.

A good loan officer is going to understand how credit works, what to look for, and know if they need good credit explanations. Also to show documentation to prove such explanations, and sometimes compensating factors.

 

 

 

Summary :  I bring this up because I currently have a borrower who has a middle credit score, fico score of 638. She originally started the loan application process with another lender in the beginning of May. Well, this lender not only missed 2 commitment dates, but the closing date of June 30th. This is a very tough FHA loan, even though she has a credit score of 638. She has a Ch. 7 bankruptcy that was discharged in June of 2003. But after this, she had a voluntary repossession of a car in 2008, which totals $10.800. Yes, this will have to be paid off.  Her credit outside of that?  Just one credit card that she has had for 1 year. And I have qualifying ratios of 38/48. But yes, I have several excellent compensating factors, such as canceled checks for rent and a car that someone else bought for her, and about 2 years worth of cash reserves. And the fact that she has been on her job for 9+ years and her mortgage payment to only increase by 12% more than her rent payment.

Overall, the worst part was that the other lender came back to her about a week ago and said, sorry, we can't do your FHA loan because your credit score doesn't meet our criteria. Not every lender can do every deal. Her credit score never changed. To me, just a loan officer or lender saying... it was a hard deal and we didn't review the facts upfront, when we gave you a pre-approval letter. 

My advice?  Just be careful of loan officers that promise loans to those with bad credit or less than perfect credit. And those that make it sound like FHA loans are good for those that have bad credit. You need the knowledge of a good loan officer and a good lender such as Infinity Home Mortgage, that has common sense underwriting, and to put the pieces together.

 

Those with less than perfect credit or low credit scores - Please don't hesitate to reach out to me.  I would love to help you and show you how to get your scores up.

 

 

• Mortgage Financing made to look easy - FHA loans Have NO Min Credit Score for Florida Homebuyers - Really???

   

 

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                                                                                                           FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

Follow me on:

 

 

_____________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc

 

Be very careful on what you hear from others when it comes to the real estate market

 

 

There is some news out there from realtors and so-called experts advising buyers to maybe wait for a year or so.  This kind of stuff angers me for many reasons.  Here is a question I just read from a potential home buyer:

Where do you think home prices will be by the end of this year and by next June 2011 in New Jersey.

 

Answer by a realtor :

I'll go with down 3% end-of-year and 5-6% by next June. Employment number continue to be terrible, so there is no hope of appreciation for the short term. There is also more and more inventory which will add to negative price pressure.

 

 

 

Nobody has a true crystal ball. All many of us can do is speculate, use our knowledge, expertise, and common sense. But if you are dealing with someone that doesn't look at something from both sides of the fence, to give you good knowledge and food for thought, it could cost you thousands of dollars.

Trying to determine when a good time to purchase a home can be frustrating at times. Asking yourself, if we wait a tad longer, we could get a better deal. What the realtor stated above, I will not disagree with.  There is some logic to what he stated.  But giving you this information and not taking it to the next level, could make your decision a bad one. Let's explore it some more.

 

 

 

Comparing future depreciation of homes by 3% to 6%

 

 

 

 

 

 

 

 

 

 

 

This scenario is taking into consideration that you are currently renting or that you own a home. So if you bought a home now and compared it to buying a home in 6 months, by December 2011, you would have gained slightly on the difference of equity by buying now. If you take in account the 3% difference in the home price in 6 months from now, and the fact that your payment would be $33.32 more a month, you would have spent $399.84 more in mortgage payments. Yes, you would have bought a house for $7,125 less with the 3% depreciation, but by December 2011 that difference would only be $5,044. Then subtract the $399.84 in extra payments, then that difference drops to $4,644. KEEP in MIND - You will also be starting an interest deduction sooner if you bought now also, which I didn't figure into the whole equation. Which means you would write some of this off in 2011 which you would not have until 2012 if you bought at the end of the year. (my main focus was just showing if you bought now than in 6 months from now)

 

 

Summary : You need to ask yourself these questions. 

• Why are you buying a home? 

• Can you actually afford to buy a home now?

• Focus on your mortgage payment and not your interest rate.  Meaning, what mortgage payment are you comfortable with.

• Review your goals. Your 3 yr, 5 yr, and 10 yr goals. The average person stays in their home for 6.7 years. 

 

Overall, you hear so much talk about people being upside down in their homes.  Ignore this and go back to my questions, the main reason to why you are buying a home.  It's normally a long term investment, a place to grow with memories, to raise a family, and so many other reasons. There is no crystal ball that tells you what interest rates will be in 6 months or where home values will be.  Think clearly before listening to just one side.

 

Buy now or wait ???  If I was in the market to buy, felt comfortable, had all my ducks in a row, I would buy NOW.

 

 

For good reading :

Mortgage Interest Rates - Mortgage Market Reports - June 29th, 2010

 

I have BLOWN a gasket in Real Estate !!! Using FHA loans & being upside down ?

 

_____________________________________________________________________________________________________

 

                  

                                                                                                           FOLLOW ME ON FACEBOOK

 

 

- FHA Loans - USDA Loans - VA Loans -

- Energy Efficient Mortgages - 

- Conventional Loans - 203 k loans -

- FHA Home Loans - Mortgages -

 

Experience & Knowledge at its BEST !!!

 

 

Follow me on:

 

 

_____________________________________________________________________________________________________

For more information on FHA loans, please go to this link. The FHA Expert

For important mortgage insight to watch for, please read : Consumers need to be aware of these Red Flags!

For information about FHA myths & FHA rumors, please read : FHA Myths & Rumors

 

Copyright © 2010 by Jeff Belonger of Infinity Home Mortgage Company, Inc